When it comes to the psychology of pricing products or services, what you don’t know might be impacting your B2B revenue. Experts talk about the characteristics of a fantastic B2B sales team or how to recruit the best sales reps. These elements have a massive impact on your performance, but the psychology of numbers is another topic that you shouldn’t disregard. A simple change to your existing B2B pricing strategy can make or break your next sale.
Successful B2B salespeople know how to present pricing to make a product or service seem attractive. Mastering the art of pricing provides your B2B sales campaigns with an added boost.
You want customers to understand the key benefits of what you’re selling before they see your prices so the cost is shared with proper context. Your sales team will have already provided them with a way to think about the positive return of your offering.
How can you start using the links between consumer psychology and pricing to take your sales to the next level?
Why charm pricing ending in 99 work so well
Charm pricing is, hands down, the most common strategy adopted by businesses around the world, regardless of industry. Simply reduce the left digit of your price by one whole unit. Charm prices are why nothing at the store costs a whole dollar—it costs 99 cents instead. This psychological pricing method is so prominent that most consumers don’t even recognize it as a strategy. They just expect it.
But why is charm pricing so effective?
Let’s be real here. As a consumer, the idea that you’re saving one cent isn’t a deciding factor in your purchase. The difference is in that smaller left digit—that number is what’s really impacting the sale. So, if you have a product that costs $3.00, reducing it to $2.99 helps you reap the benefits of charm pricing. As consumers, our minds equate that small, one-cent drop in price with the assumption that a product or service is cheaper than it actually is.
Lowering your pricing by one cent seems almost frivolous, but the upshot of this pricing strategy is no joke. This slight change can increase sales by up to 24% by using simple psychology.
Selling luxe with prestige pricing
At the opposite end of the spectrum from charm pricing is prestige pricing. Companies using this psychological pricing strategy price their products or services in rounded numbers, so they’re charging $100, not $99.99. While this seems like a contradiction, prestige pricing is also a proven strategy for increasing your sales.
Let’s look at the psychology at play here and why these rounded numbers equate to price points that sell. Prices like $100 or $500 are quickly processed and more likely to stand out. You don’t have to think much when you look at a prestige price, and it’s generally much easier to calculate how this price may fit into your budget.
However, prestige pricing works with round numbers, i.e., numbers ending in 0s or 5s, rather than a seemingly random sales price like $63. Can you still make a healthy margin if you drop that price to $60 or increase it to $65?
If you’re interested in adopting a prestige pricing strategy, it’s worth experimenting to see what pricing works best for your market and your bottom line.
BOGO or bust
When you think about the psychology of pricing, one strategy has been used time and again: Buy One Get One or BOGO.
This psychological pricing strategy works because you’re keying in on value. Consumers may not need another product or service, but they’ll bite because they’re getting something for free with their purchase. They’ll throw logic aside and buy something simply to get a free item—regardless of its actual value.
You will need to vary your BOGO offerings to get consumers to feel genuinely compelled to buy. They have to think that the free offering has inherent value. Like prestige pricing, using a BOGO strategy requires some experimentation to find that sweet spot between cost and revenue generated. You may want to try campaign variations, like buy one and get two free, buy one and get $5 off your next purchase or buy one and get these free bonuses.
Comparative pricing: Similar products, different prices
In terms of psychological selling, comparative pricing is a popular strategy that pits one price against another for a very similar product. You’re offering two products, but one of those products is far more attractive to consumers than the other, by design.
Comparative pricing is a psychological play that happens to work incredibly well. You’re offering two similar products at vastly different price points, and most consumers will buy the more expensive option because they believe it’s more valuable.
In truth, you could even offer the same product, perhaps with different sales copy or a different product image, and leads will still choose the more expensive option more frequently.
Design and psychological price points
Pricing and varying your offerings aren’t the only keys to selling success. Design can also significantly impact sales.
Combine font, size and color to emphasize your price points. Be mindful of the psychology of color, particularly when it comes to your marketing assets. The goal is to trigger cognitive fluency, or a sense of ease or familiarity, with your audience.
If they see a product price written in large, bold font, they assume that the price must be the best or offer the best value. This easy mental math requires less effort, so it’s that much easier for a potential customer to make a buying decision.
Pricing design tends to work best when you’re comparing two similar products or services against each other, but you’ll need to be sure the price point is correct when using this strategy. Studies show that the difference in pricing should be no more than $10, or you’ll be asking for too much mental overhead from your potential customer.
Which pricing strategy is the best for your B2B business?
If you’ve read this far, you might feel perplexed. Don’t these five psychological pricing strategies contradict each other? You’re not wrong. Some of them do, but that doesn’t mean you shouldn’t adopt them when pricing products or services.
The truth is that the right pricing strategy is the one that works for your B2B company, and resonates with your particular audience. Therefore, it’s worth testing a few different approaches to ensure you’re using a pricing strategy that delivers the most conversions.